A Loan Agreement was signed today in Washington D.C., U.S.A., during the 2016 Annual Meetings of the World Bank Group and the International Monetary Fund, between the Republic of Uganda and Kuwait Fund for Arab Economic Development (The Fund), whereby the Fund will make a loan in the amount of 3.5 million Kuwaiti Dinars (K.D.3,500,000/-), equivalent to about U.S. $ 11.9 million, to the Republic of Uganda, to assist in financing the Rural Electrification in Six Districts Project.

 

The Loan Agreement was signed by His Excellency Mr. Matia Kasaija Minister of Finance, on behalf of the Republic of Uganda, while Mr. Hesham Al-Waqayan, Deputy Director-General of the Fund signed the Loan Agreement on behalf of Kuwait Fund for Arab Economic Development.

 

The project aims at meeting the present and future demand on electric energy at reasonable prices, to limit migration to cities, and to enhance living conditions in six rural districts, namely, Kiryandongo, Kibaale, Nebbi, Bushenyi, Kasese and Rukungiri in the Republic of Uganda, by extending 33 and 11 kV distribution lines from the existing main substations to those rural districts.

 

The project consists of extending about 285 km of MV lines and about 250 km of 415 V LV lines. Furthermore, the project also includes about 180 pole mounted distribution transformers with capacities ranging from 25 to 100 kVA, in addition to consultancy services required for the project and institutional support.

 

The total cost of the Project is estimated at about 52.82 billion Ugandan Shillings, equivalent to about 4.44 million Kuwaiti Dinars. The Fund loan covers about 79% of the total project cost, while the Ugandan Government covers the rest of the project cost together with any cost increase that may arise in the future.

 

The Loan is made for a term of 25 years, including a grace period of 4 years, and will be amortized by 42 semi-annual installments, the first of which will be due on the first date on which any interest or other charges on the loan shall fall due after the elapse of the grace period.  Loan will bear interest at 1.5% per annum in addition to a charge of 0.5% for meeting administrative costs and the expenses of implementation of the Loan Agreement.

 

The aforementioned loan represents the ninth loan made by the Fund for financing projects in Uganda, as Kuwait Fund has already made eight loans to the Republic of Uganda in different sectors with a total amount of K.D. 17.6 Million. Furthermore, the Fund has previously extended a grant in an amount of K.D. 194,000. Additionally, the government of Kuwait provided a grant in the framework of the Good Will Fund of US$ 7 Million, fully withdrawn.